VZCZCXRO6074
PP RUEHGR
DE RUEHSP #0517/01 1442143
ZNR UUUUU ZZH
P 242143Z MAY 07
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC PRIORITY 8229
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAHLC/HOMELAND SECURITY CENTER WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHEHNSC/NSC WASHDC
RHMFISS/HQ USSOUTHCOM MIAMI FL//HQ USSOUTHCOM JS MIAMI FL

UNCLAS SECTION 01 OF 02 PORT OF SPAIN 000517 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/CAR, WHA/PPC, EEB/TPP/BTA, INL 
STATE PASS USTR FOR AUSTR EISSENSTAT, V LOPEZ 
USDOC/ITA/MAC/LATIN AMERICA CARIBBEAN 
TREASURY FOR OFFICE OF TAX POLICY 
DOE FOR OFFICE OF POLICY AND INT'L AFFAIRS 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ETRD EFIN MARR SNAR TD
SUBJECT:  RESPONDING TO PRIME MINISTER MANNING'S BILATERAL AGENDA 
 
REFS: (A) 07 POS 389, (B) 06 POS 1344, (C) 06 POS 1125 
 
(D) 04 POS 1388, (E) 04 POS 2202 (NOTAL) 
 
SENSITIVE BUT UNCLASSIFIED - PROTECT ACCORDINGLY 
 
¶1. (U) This is an action request - see paragraph 3. 
 
¶2. (SBU) SUMMARY:  When Prime Minister Manning visits Washington for 
the Caribbean 20/20 Conference in June, he will bring with him a 
series of bilateral proposals on trade, tax policy, and narcotics 
interdiction that he has been raising consistently in encounters 
with visiting senior USG officials over the last several years. 
Since September 2006, he has criticized Washington in increasingly 
harsh terms, both publicly and in private, for turning its back on 
the Caribbean and for not responding to his bilateral agenda (REFS 
A-C). 
 
¶3. (SBU) SUMMARY CONTINUED: Post recognizes that the 20/20 
Conference is intended in part to counter perceptions that the U.S. 
is "neglecting" the Caribbean.  We believe PM Manning will find this 
message far more convincing if he receives clear and direct 
responses to the issues on his agenda before he travels to 
Washington.  ACTION REQUEST: Post requests Washington agencies' 
guidance on how to respond to PM Manning's proposals on trade, 
taxes, and drug interdiction.  END SUMMARY AND ACTION REQUEST 
 
--------------------------------------- 
Trade: Access to U.S. market post-CBTPA 
--------------------------------------- 
¶4. (SBU) Prime Minister Manning has repeatedly proposed that the 
United States consider negotiating a partial-scope trade agreement 
providing duty-free treatment for "energy-based products" from T&T. 
As a separate proposal, Manning also has asked that the United 
States confer duty-free treatment for goods packaged in T&T, 
regardless of origin.  Manning has described the latter proposal as 
a way of stimulating manufacturing in other Caribbean countries.  It 
also dovetails with efforts to promote the local printing and 
packaging industry, one of seven industries in which the GOTT is 
targeting efforts to develop the non-energy economy. 
 
¶5. (SBU) In a July 26, 2004, letter to then-USTR Ambassador 
Zoellick, GOTT Trade Minister Kenneth Valley proposed that future 
bilateral consultations address duty free access for goods packaged 
in T&T as well as "enhanced treatment for goods which are pertinent 
to the economic development of Trinidad and Tobago" (reftel D). 
 
¶6. (SBU) Post believes these proposals reflect concern over the 
scheduled expiration of the Caribbean Basin Trade Partnership Act 
(CBTPA) in 2008 and the perceived "instability" of Caribbean Basin 
Initiative (CBI) trade preferences generally, in the absence of a 
WTO waiver.  As other leading CBI beneficiaries "graduate" to the 
DR-CAFTA, T&T is left as our largest remaining CBI supplier. 
Specifically, the expiration of CBTPA will end duty-free entry of 
certain T&T petroleum products, valued at US$2.6 billion in 2006 
according to U.S. import statistics, as well as much smaller volumes 
of fish and apparel.  Another US$1.1 billion of T&T products entered 
the U.S. under Caribbean Basin Economic Recovery Act (CBERA) 
preferences in 2006, including methanol (US$1.0 billion), ethanol 
($37 million), and a range of manufactured goods. 
 
¶6. (SBU) While Manning's trade ideas appear inconsistent with U.S. 
and WTO standards for free trade, they can nevertheless be taken as 
an opportunity to engage the largest CARICOM trading nation in a 
discussion on the future of the U.S.-CARICOM trade relationship, as 
well as prospects for using T&T's chairmanship of the 2009 Summit of 
the Americas to advance trade liberalization in the hemisphere.  As 
recently as his March 20 visit to Caracas, PM Manning reiterated 
T&T's "irrevocable commitment" to the Free Trade Area of the 
Americas, even at the risk of souring his efforts to enhance energy 
cooperation with Venezuela. 
 
--------------------------------------------- - 
Tax Treaty: Shifting the Exploration Write-off 
--------------------------------------------- - 
¶7. (SBU) Prime Minister Manning has proposed to renegotiate the 
U.S.-T&T double taxation treaty, signed and ratified in 1970, in 
order to shift the tax deduction resulting from exploration in T&T 
by U.S. oil and gas companies to the U.S. tax jurisdiction.  Manning 
 
PORT OF SP 00000517  002 OF 002 
 
 
has justified this approach by asserting that the country whose 
energy security stands to benefit from oil and gas discoveries (i.e. 
the United States) should bear the fiscal burden of associated 
corporate tax write-offs. 
 
¶8. (SBU) On several occasions in 2004-5, Manning pointed to British 
Petroleum's local operation bpTT as a source of concern, describing 
bpTT as a U.S. company by virtue of its incorporation in Delaware 
and its practical control by U.S. interests.  In 2006, bpTT's costly 
Deep Ibis well may have generated another significant tax write-off 
when it failed to discover hydrocarbons. 
 
¶9. (SBU) Post files show that the GOTT Ministry of Foreign Affairs 
conveyed the request to renegotiate the tax treaty in a diplomatic 
note delivered to Post in November 2004 (reftel D).  We have found 
no record of a formal U.S. response in Post files. 
 
--------------------------------------- 
Narcotics Interdiction "Up the Islands" 
--------------------------------------- 
¶10. (SBU) Manning has proposed that the United States pay the cost 
for Trinidad & Tobago to patrol the waters of the Eastern Caribbean 
for the purpose of narcotics interdiction.  The GOTT is in the 
process of upgrading its ability to monitor and patrol T&T 
territorial waters, but Manning has expressed concern that 
narco-traffickers will simply move their operations to other islands 
in the Eastern Caribbean, such as Grenada, St. Vincent & the 
Grenadines, Antigua & Barbuda, St. Kitts & Nevis, and Dominica. 
 
¶11. (U) The GOTT procured an Israeli manufactured 360-degree radar 
system in 2005.  More recently the GOTT signed an agreement with the 
United Kingdom to purchase three 90-meter off-shore patrol vessels 
(OPVs) for delivery in 2009; separately they are procuring four 
armed helicopters and four to six interceptors, to be carried by the 
OPVs.  They are also re-issuing a commercial tender for six fast 
patrol craft. 
 
¶12. (SBU) Manning has told visiting USG officials that the GOTT is 
prepared to patrol "up the islands" but that it cannot afford the 
additional vessels that would be required.  On one occasion he 
estimated the cost at US$2 to 3 billion (reftel C).  In proposing 
that the United States take on this cost, he has repeatedly pointed 
out that the drugs transiting the Caribbean are destined for the 
U.S. and other developed countries.  He also has suggested that 
other CARICOM states would find it "more palatable" to have GOTT 
vessels rather than USG vessels entering their territorial waters. 
 
¶13. (SBU) Post anticipates Manning also will raise this idea during 
the scheduled August visit of SOUTHCOM Commander Admiral Stavridis. 
 
¶14. (SBU) COMMENT:  We are not aware that the T&T Embassy has 
followed up with State or other Washington agencies on these 
proposals.  Post believes, however, that it would be timely to clear 
the air on Manning's bilateral agenda in advance of the Caribbean 
20/20 conference.  Each of his proposals has obvious problems, but a 
clear point-by-point response, paired with an offer to engage on 
underlying concerns where appropriate, could shift GOTT thinking in 
more constructive directions.  This could only benefit our efforts 
to work with the GOTT to advance mutual interests in CARICOM and in 
the run-up to the 2009 Summit of the Americas, which T&T will host. 
END COMMENT. 
 
AUSTIN